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Measuring Measure 30: Legislative report provides perspective

The average Oregon taxpayer would see a $133 rise in state income taxes because of Measure 30. The net effect would be $111, because state taxes are deductible for federal income tax purposes.

The income tax increase is heavily skewed toward the upper income tax brackets. Oregonians with annual incomes between $20,000 and $30,000 would see a net tax increase averaging $19. Those with incomes above $200,000 would pay an average of $1,929 more.
Register-Guard
January 4, 2004
 http://www.registerguard.com/news/2004/01/04/ed.edit.m30study.0104.html

Measuring Measure 30: Legislative report provides perspective
A Register-Guard Editorial

Ballots for the Feb. 3 special election will be mailed in just a few weeks, which means Oregon voters must soon judge whether Measure 30 is a life preserver for public services or a pair of cement overshoes for the economy. Both claims are shouted with equal conviction.

Fortunately, the Legislative Revenue Office has prepared a sober analysis of the measure that will be helpful to voters as campaign rhetoric rises to a crescendo.

Measure 30 will appear on a Feb. 3 special election ballot because opponents of a package of tax increases approved by the 2003 Legislature gathered enough petition signatures to force a public vote. The biggest of the increases would be a temporary income tax surcharge of up to 9 percent. Altogether, the increases would bring an additional $800 million to the state during the current two-year budget period. If Measure 30 is defeated, Oregon's budget - including state support for local schools - will have to be cut by that amount.

Opponents of Measure 30 describe the Legislature as having approved the largest tax increase in Oregon history, and argue that a tax hike of such great magnitude would cause Oregon's economic recovery to sputter. The Legislative Revenue Office study ( http://www.leg.state.or.us/comm/lro/home.htm) puts that claim in perspective by comparing Measure 30 to a package of tax increases, including a temporary income tax surcharge, adopted by the Legislature in 1983.

The $800 million raised by Measure 30, the revenue office calculates, represents 7.7 percent of the state's general fund. The $420 million in tax increases adopted in 1983 represented 13.2 percent of the general fund. The revenue generated by Measure 30 would amount to 0.38 percent of total personal income in Oregon. The 1983 increases amounted to 0.64 percent of total income.

The dollar amount of the tax increases in Measure 30 may indeed be larger than any other single tax increase, excluding permanent increases such as gas-tax hikes that raise billions over long periods. But in terms of its effects on the state budget and Oregonians' incomes, the 1983 increases were nearly twice as big. The relatively larger increases of 1983, however, did not sidetrack an economic recovery that began soon afterward.

The Legislative Revenue Office's report also helps explain why a fiscally conservative Legislature would resort to tax increases to balance its budget.

In the 2001-03 budget period, general fund revenue declined by 7.5 percent from the preceding period - the first actual decline since the 1939-41 biennium, and the largest since 1933-35. The decline would have been larger if the Legislature hadn't filled its budgetary hole with new revenue from $450 million in bond sales. Legislators putting together the 2003-05 budget were standing in a deeper hole than Oregon had seen in more than half a century.

The revenue office also provides useful tables showing Measure 30's effect on taxpayers at various income levels. The average Oregon taxpayer would see a $133 rise in state income taxes because of Measure 30. The net effect would be $111, because state taxes are deductible for federal income tax purposes.

The income tax increase is heavily skewed toward the upper income tax brackets. Oregonians with annual incomes between $20,000 and $30,000 would see a net tax increase averaging $19. Those with incomes above $200,000 would pay an average of $1,929 more.

Federal income tax cuts have been skewed in the same direction - taxpayers with incomes of more than $200,000, the report notes, have seen their federal income taxes decline by an average of $11,499, while those in the $20,000 to $30,000 range got an $87 cut. The reduction in federal taxes would greatly exceed the Measure 30 increase at all income levels.

The Legislative Revenue Office's evenhanded treatment of the details of Measure 30 is welcome as the campaign shifts into high gear. Voters would be well-advised to use the best information they can find in evaluating claims about the measure's effects. It's a big, important tax measure.

But as the revenue office's report makes clear, past responses to smaller problems have been relatively larger - and the net effects on most Oregonians' tax situation would be slight.